FINANCIAL HIGHLIGHTS CHAIRMAN'S STATEMENT CHIEF EXECUTIVE'S STATEMENT BROADENING OUR INTERNATIONAL PROFILE GROUP FINANCE DIRECTOR'S REPORT BOARD OF DIRECTORS CORPORATE CITIZENSHIP CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 Accounting policies 2 Foreign currencies 3 Segment information 4 Operating profit adjusting items 5 Income tax expense 6 Minority interests - Income statement 7 Earnings and earnings per share 8 Investment income (net of investment losses) 9 Banking interest and similar income 10 Fee and commission income, and income from service activities 11 Finance costs (including interest and similar expenses) 12 Banking interest expense 13 Fees and commission expense, and other acquisition costs 14 Other operating and administrative expenses 15 Acquisition of subsidiaries 16 Goodwill and other intangible assets 17 Investments in associated undertakings 18 Investment property 19 Property, plant and equipment 20 Operating lease arrangements 21 Finance lease arrangements 22 Deferred tax assets and liabilities 23 Insurance contract provisions 24 Deferred acquisition costs 25 Loans, receivables and advances 26 Derivative financial instruments - assets and liabilities 27 Financial assets fair valued through income statement 28 Other financial assets 29 Short-term securities 30 Other assets 31 Assets and liabilities held-for-sale 32 Financial liabilities fair valued through income statement 33 Borrowed funds 34 Provisions 35 Deferred revenue 36 Amounts owed to depositors 37 Other liabilities 38 Equity 39 Minority interests - balance sheet 40 Post balance sheet events 41 Post employment benefits 42 Share-based payments 43 Dividends 44 Contingent liabilities 45 Commitments 46 Related parties 47 Principal subsidiaries and Group enterprises 48 Financial risk 49 Insurance risk

COMPANY FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS EUROPEAN EMBEDDED VALUE SUPPLEMENTARY INFORMATION NOTICE OF ANNUAL GENERAL MEETING SHAREHOLDER INFORMATION

Notes to the consolidated financial statements

For the year ended 31 December 2006

20 Operating lease arrangements

(i) The Group as lessee

		£m
Minimum lease payments under operating leases recognised as an expense in the year	Year ended 31 December 2006	Year ended 31 December 2005
Banking	39	42
Non-banking	27	4
Minimum lease payments	66	46

						£m
	Year ended 31 December 2006			Year ended 31 December 2005
Outstanding commitments under non-cancellable operating leases, fall due as follows:	Banking	Non- Banking	Total	Banking	Non- Banking	Total
Within one year	45	26	71	39	4	43
In the second to fifth years inclusive	234	90	324	194	11	205
After five years	236	48	284	282	-	282
	515	164	679	515	15	530

Operating lease payments principally represent rentals payable by the Group for the rental of buildings and equipment.

(ii) The Group as lessor

		£m
Assets subject to operating leases	Year ended 31 December 2006	Year ended 31 December 2005
Land	3	4
Buildings	17	24
Investment property	804	847
	824	875

		£m
Future minimum lease payments of contracts with tenants	Year ended 31 December 2006	Year ended 31 December 2005
Within one year	46	54
In the second to fifth years inclusive	115	134
After five years	32	34
	193	222